$WOOF Pay

First, I have to share my joy at learning that Petco's NASDAQ ticker symbol is $WOOF. That's a good one. I'm a dog person, so I like it, but I have to wonder if the cat crowd is wishing for $MEOW.

Moving on, Petco announced a new credit card program integrated into their recently refreshed loyalty program that will be issued by Alliance Data (Comenity Bank) and Mastercard. As frequent CardsFTW readers will note, there have been a ton of co-brand card announcements lately. I am excited about this one, perhaps most of all because you can put your pet's photo on the card. Awwww.

Petco is building on its Petco Pals rewards program. Pals is an excellent program with a simple one point per dollar spent model (and free for anyone to join). These are lucrative points: for every 100 points earned, members receive a $5 reward certificate, generating an effective 5% cashback rate. This reward is without a card account or fee. The downside for consumers is a relatively rapid expiration of points (180 days) and reward certificates (45 days) requiring frequent shopping.

The new Petco Pay Card is available today. (In contrast to many of our startup announcements, which are just that: announcements of future launches.) The card bumps up the earning rate to 8% at Petco stores, plus 2% at grocery stores and 1% everywhere else. The card also donates $0.25 per purchase to the Petco foundation (up to one million dollars).

This card looks a lot like other Comenity bank offerings, such as cards for the Williams-Sonoma brand family and Crate & Barrel. These retailer co-brands include 10% cashback at the brand (in the form of certificates) and benefits like free shipping.

While people do love to cook, the market for frequent spending at a pet store (food, toys, etc.) is much higher than Williams-Sonoma (although the ticket size is probably smaller). I've poked around the pet space a bit, and startup Sincere is developing a rewards debit card for pet parents. Going up against the giant that is Petco will be challenging for anyone who is not a pet retailer.

With the growth in the pet space, accelerated by the pandemic, I predict this card will grow nicely but soon share the space with cards from PetSmart, Chewy, and one or two startups. I'd love to see a card that includes some essential services like a high-deductible insurance plan or integrated discounts for grooming, vet care, and more.

First Crypto Rewards Surprise from SoFi

Over the past few months, I've highlighted upcoming offerings of bitcoin rewards credit cards from BlockFi, Gemini, and Unifi Money. Crypto giant Coinbase offers a debit card. With the surging interest in all things crypto, personal finance giant SoFi announced that its credit card will now support crypto redemption.

SoFi appears to have beaten the dedicated crypto companies to the punch with a live credit card offering added on crypto rewards. The card carries a 2% effective cashback rate when points are redeemed into a SoFi account (cash, invest, and now crypto), which presents a robust offering. The card carries no annual fee. If you're using SoFi for any part of your personal finance stack, this is a compelling card with a high rewards rate and several different redemption options.

How long until someone puts these last two topics together with a Dogecoin Credit Card?

That’s a card both pet lovers and crypto enthusiasts can get behind.

More Business Card News

While highly-valued startups Brex, Ramp, and Divvy have had their share of the news lately, they are far from the only startups pursuing growth in the business card and account space. This week, Rho, a startup that offers a deposit account and debit card for businesses, announced new debt financing to help their customers. Margins on pure cards, especially ones with rewards, are low, and moving into lending is often the only way to make the economics attractive.

Approaching the market from a different angle is Extend, which offers virtual card services for businesses and banks. They announced a new partnership with Pacific Western Bank to launch their solution to Pacific Western customers. Extend provides a suite of services to modernize more traditional banks while taking advantage of existing relationships. Many of the card startups in the news provide banking-like services but are not a bank and straddle the line between software infrastructure and direct products. Banks are big and not going away (yet). Especially in the business realm, banks have deep relationships with local customers who depend on lending. Providing software to banks can be a slow sales process. Once sold, however, this business is a lucrative option with a built-in customer acquisition channel.

Late-breaking news. Normally I don’t try to cover timely news, but between drafting and finalizing today’s newsletter Forbes broke news that Bill.com is in talks to acquire Divvy. This is a logical move for Bill.com, which needs a virtual card offering and speaks to the room for growth in this space.

Retailers Sue Over Interchange Again

I've covered the fight over interchange before. This one surprised me, though. Retailers are now suing the Federal Reserve Bank over its debit card swipe fees. I suppose suing the networks just wasn't getting the job done. The North Dakota Retail Association and the North Dakota Petroleum Marketers Association filed suit alleging the Fed has not adequately made the required statutory adjustments to debit interchange regulations. The regulated rate is $0.225, which sounds pretty good to me, but the suit states that as costs are lower, the fee should be as little as 3.6 cents. Pennies do add up, but this feels like a skirmish far away from the battlefront that is credit card interchange.

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Thanks for reading CardsFTW, a weekly newsletter about all things debit and credit. CardsFTW is written and curated by Matthew Goldman, Founder, and CEO at Vertical Finance, a challenger credit card startup. If you're looking for insights into everyday payments beyond deal blogs, please subscribe for free at cardsftw.substack.com. If you enjoyed this, please share it with a friend! Follow me on Twitter @magoldman.